US may revoke special tariff if India continues pricing control on medical devices

USTR representatives will be meeting Indian authorities on this issue with the message that India will lose the Generalised System of Preference if it continues pricing measures on medical devices.DIVYA RAJAGOPAL | ET Bureau | April 04, 2018, 08:16 IST

The US Trade Representative (USTR) is considering to revoke special tariff provided to India if it continues with its pricing policy on medical devices manufactured by American companies, two people aware of the development told ET.

The USTR representatives, who are expected to visit India on April 9, will be meeting Indian authorities on this issue with the message that India will lose the Generalised System of Preference (GSP) if it continues with “drastic” pricing measures on medical devices.

GSP is a preferential treatment that the US government gives to its exporters from developing and developed countries. The benefits under the GSP include duty-free entry of certain goods like chemicals, gems, textiles among others.

In 2017 India was the biggest beneficiary of GSP with a subsidies worth $5.6 billion.

USTR’s position changed just a week after the Trump administration renewed the GSP agreement with India.

“US lobby groups had asked the Trump administration to renew the GSP so that they can use this as a bargaining tool with India to deter it from imposing price cuts on medical devices,” said an official from one of the US lobby groups.

“More than the intellectual property, it is the price cuts on medical devices that has become a matter of concern for certain US trade groups,” the official explained.

Last year, the Indian government decided to cap the prices of cardiac stents and knee implants by almost 70%, outraging a host of multinational companies operating in India.

The matter has put the Indian government under pressure from several US lobby group. The matter of price cuts became so volatile that Indian government shifted the chairman of the drug pricing regulator Bhupendra Singh from his position last month.

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A bench of Chief Justice Rajendra Menon and Justice V K Rao passed the order while acting on a PIL filed by Delhi-based dermatologist Zaheer Ahmed who complained that lakhs of medicines were being sold on the internet every day without much regulation, posing a huge risk to patients and doctors alike.